SOUTH AFRICA MARKET REVIEW
- South African markets closed in the green yesterday, buoyed by broad based gains in retail and financial sector stocks.
- Retailers, Lewis Group (JO:LEWJ) Ltd, Cie Financiere Richemont SA (JO:CFRJ) and Massmart Holdings (JO:MSMJ) gained 4.8%, 3.0% and 2.1%, respectively.
- Financial sector stocks, RMB Holdings Ltd (JO:RMHJ), Capitec Bank Holdings Ltd (JO:CPIJ) and Nedbank Group (JO:NEDJ) advanced 3.1%, 2.3% and 1.3%, respectively.
- Mining companies, African Rainbow Minerals (JO:ARIJ), Pan African Resources (JO:PANJ) and Merafe Resources added 2.5%, 1.9% and 1.6%, respectively.
- Telecom companies, Blue Label Telecoms and Telkom (JO:TKGJ) SA SOC rose 1.8% and 1.3%, respectively.
- On the flipside, real estate property companies, Attacq (JO:ATTJ), Fortress REIT and Emira Property Fund (JO:EMIJ) shed 1.7%, 1.6% and 0.8%, respectively.
- The JSE All Share index advanced 0.8% to close at 74,889.17.
- The UK market finished firmer yesterday, boosted by miners and energy sector stocks.
- Miners, Fresnillo (LON:FRES), Glencore (LON:GLEN) and Rio Tinto (LON:RIO) gained 4.0%, 3.4% and 3.2%, respectively, amid a rise in gold and copper prices.
- Oil companies, Royal Dutch Shell (LON:RDSa) and BP (LON:BP) advanced 3.2% and 2.7%, respectively.
- Travel and leisure companies, International Consolidated Airlines Group (LON:ICAG) SA and InterContinental Hotels Group (LON:IHG) rose 2.8% and 2.2%, respectively.
- Bankers, HSBC Holdings (LON:HSBA), Lloyds Banking Group (LON:LLOY) and Barclays (LON:BARC) added 3.0%, 2.6% and 2.0%, respectively.
- On the contrary, online supermarket company, Ocado (LON:OCDO) Group shed 4.9%. Telecommunication companies, Vodafone (LON:VOD) and BT Group (LON:BT) declined 1.6% and 1.5%, respectively.
- The FTSE 100 index advanced 1.0% to close at 7,535.78.
US MARKET REVIEW
- US markets ended higher yesterday, buoyed by robust corporate earnings report.
- United Parcel Service (NYSE:UPS) soared 14.1%, after the delivery company reported better than expected 4Q21 earnings and revenue.
- Exxon Mobil Corporation (NYSE:XOM) surged 6.4%, after the company reported 4Q21 upbeat earnings.
- Sirius XM (NASDAQ:SIRI) Holdings jumped 6.3%, after the company posted better than expected 4Q21 profits and revenue and raised its revenue outlook for FY22.
- On the other hand, AT&T declined 4.2%, after it stated that it would spin off its interest in WarnerMedia following the unit’s merger with Discovery (JO:DSBPp).
- The S&P 500 index rose 0.7% to settle at 4,546.54, while the DJIA index advanced 0.8% to close at 35,405.24.
- The NASDAQ index climbed 0.8% to end the trading session at 14,346.00.
ASIA MARKET REVIEW
- Asian markets are trading higher this morning, tracking overnight gains on Wall Street.
- In Japan, air transport company, ANA Holdings has surged 5.0%.
- Electronics company, Sony Group has advanced 3.6%.
- On the contrary, optical products company Konica Minolta has shed 2.7%.
- Meanwhile, transport company, Kawasaki Kisen Kaisha (T:9107) has declined 2.5%.
- Markets in Hong Kong and South Korea are closed today on account of a public holiday.
- The Nikkei 225 index is trading 1.6% higher at 27,522.13.
- Yesterday, Hang Seng index advanced 1.1% to close at 23,802.26.
- On Friday, the Kospi index rose 1.9% to settle at 2,663.34.
COMMODITIES
- At 06:00 SAST today, Brent spot prices fell 0.4% to trade at $90.99/bl, reversing previous session gains.
- Yesterday, Brent spot prices rose 0.4% to settle at $91.31/bl, amid continued geopolitical tensions and tighter supplies. Further, the American Petroleum Institute (API) reported that crude oil inventories declined by 1.60mn bls for the week ended 28 January.
- Yesterday, the Illinois North Central No.2 Yellow corn spot prices rose 1.4% to $6.1675/bushel.
- At 06:00 SAST today, gold prices declined 0.2% to trade at $1,797.80/oz. Yesterday, gold gained 0.2% to close at $1,801.19/oz, as a weaker US dollar boosted the demand for the safe haven metal.
- Yesterday, copper rose 1.7% to close at $9,737.50/mt. Aluminium closed 0% higher at $3,050.76/mt.
CURRENCIES
- Yesterday, the South African rand strengthened against the US dollar. In the US, manufacturing activity eased in January, as output and new orders dropped amid the Omicron wave of Covid-19 and persistent supply and labour shortages. New orders dropped in January, as backlog of orders remained high, reflecting production delays amid pandemic. Further, clogged ports, limited warehouse space and short supply of trucks lead to widespread product shortages and the highest inflation since the early 1980s.
- The yield on benchmark government bonds mostly fell yesterday. The yield on 2026 bond fell to 7.66%. Further, the yield on 2023 bond advanced to 5.37% while that for the longer-dated 2030 issue fell to 9.28%.
- At 06:00 SAST, the US dollar is trading 0.1% higher against the South African rand at R15.2768, while the euro is trading 0.1% higher at R17.2182. At 06:00 SAST, the British pound has marginally gained against the South African rand to trade at R20.6492.
- Yesterday, the euro declined against most of the major currencies. In Germany, retail sales dropped in December, amid imposition of lockdown restrictions following a surge in Omicron Variant of Covid-19. Manufacturing activity dropped in Germany in December. In the eurozone, growth in the manufacturing sector accelerated in January amid ease in supply chain constraints.
- At 06:00 SAST, the euro marginally slipped against the US dollar to trade at $1.1271, while it has marginally gained against the British pound to trade at GBP0.8338.
ECONOMIC UPDATES
- The manufacturing PMI in South Africa rose to a level of 57.10 in January, compared with a reading of 54.10 in the prior month.
- On a monthly basis, the seasonally adjusted house prices in the UK climbed 0.8% in January, more than market expectations for a rise of 0.6%. House prices had recorded a rise of 1.0% in the previous month.
- The final manufacturing PMI in the UK registered a drop to 57.30 in January, less than market expectations for a fall to 56.90. The manufacturing PMI had registered a level of 57.90 in the previous month. The preliminary figures had indicated a drop to 56.90.
- The flash consumer price index (CPI) (ex-tobacco) in France registered a rise of 0.3% on a monthly basis, in January. In the previous month, the CPI (ex-tobacco) had risen 0.2%.
- In January, the preliminary EU normalised CPI recorded a rise of 0.1% in France on a monthly basis, compared with market expectations of a fall of 0.2%. In the prior month, EU normalised CPI had advanced 0.2%.
- In January, the final manufacturing PMI dropped to 55.50 in France, meeting market expectations. The preliminary figures had also indicated a drop to 55.50. In the previous month, manufacturing PMI had recorded a reading of 55.60.
- Retail sales in Germany fell 5.5% on a monthly basis, in December. Retail sales had advanced 0.6% in the previous month.
- In January, the seasonally adjusted unemployment rate recorded an unexpected drop to a level of 5.1% in Germany. Unemployment rate had registered a reading of 5.2% in the prior month.
- In January, the final manufacturing PMI advanced to 59.80 in Germany, less than market expectations for a rise to 60.50. The preliminary figures had indicated an advance to 60.50. In the prior month, manufacturing PMI had recorded a level of 57.40.
- In January, the final manufacturing PMI climbed to 58.70 in the eurozone, compared with a reading of 58.00 in the prior month. Markets were expecting the manufacturing PMI to climb to 59.00. The preliminary figures had indicated an advance to 59.00.
- In Canada, the gross domestic product (GDP) rose 0.6% on a monthly basis in November, compared with an advance of 0.8% in the previous month. Market anticipations were for the GDP to climb 0.3%.
- In January, the ISM manufacturing activity index in the US dropped to 57.60, lower than market expectations of a fall to a level of 57.50. The ISM manufacturing activity index had registered a reading of 58.70 in the previous month.
- In the US, ISM new orders fell to a level of 57.90 in January. ISM new orders had recorded a reading of 60.40 in the previous month.
- The ISM manufacturing activity index in the US eased to 57.60 in January, compared with a revised reading of 58.80 in the prior month. Markets were expecting the ISM manufacturing activity index to ease to a level of 57.50.
- ISM new orders recorded a drop to 57.90 in the US, in January, compared with a revised reading of 61.00 in the prior month.
- JOLTs job openings rose unexpectedly to a level of 10925.00 K in the US, in December. In the prior month, JOLTs job openings had recorded a revised level of 10775.00 K.
- The manufacturing PMI eased to 56.20 in Canada, in January, compared with a reading of 56.50 in the previous month.
- In January, the final Markit manufacturing PMI in the US dropped to 55.50, lower than market expectations of a fall to 55.00. The preliminary figures had indicated a fall to 55.00. In the previous month, the Markit manufacturing PMI had recorded a reading of 57.70.
CORPORATE UPDATES
SOUTH AFRICA
- Vodacom Group Limited: The telecommunication company, in its quarter ended 31 December 2021, stated that its revenue increased 6.4%, from the previous year to R26.75bn. Group service revenue advanced 5.3%, supported by sustained demand for connectivity and growth in new services. Its South Africa service revenue grew 4.5%, with excellent growth in Vodacom Business. Its international service revenue increased by 6.7%, supported by data and M-Pesa revenue growth. Financial services revenue increased 12.5% to R2.00bn, with strong adoption of our South African super-app, VodaPay.
- Impala Platinum Holdings Limited (JO:IMPJ): The mining company, in its 1H22 trading results, stated that sales volumes declined by 5.0% to 1.55mn 6E ounces from the comparative period, in line with lower refined production. The 10.0% increase in the achieved US dollar basket price was largely offset by the 8.0% strengthening of the rand exchange rate, resulting in a 2.0% improvement in Group sales revenue to R36,230 per 6E ounce sold. Group capital expenditure is expected to be around R3.60bn compared to the R2.70bn of the comparative period. This is due to accelerated project spend at Zimplats and an overall increase in capital spend across the operations as capital spend in the comparative period was constrained by Covid-19.
- AngloGold Ashanti (JO:ANGJ) Limited: The mining company, in its FY21 trading statement, revealed that it expects its headline earnings to be between $572.00mn and $642.00mn, and its basic EPS to be between 139.00c and 154.00c as compared with 277.00c in the previous year. It expects its HEPS to be between 137.00c and 153.00c as compared with 238.00c in the prior year.
- Aspen (JO:APNJ) Pharmacare Holdings Limited: The pharmaceutical company, in its 1H22 trading statement, reported that its EPS is expected to be between 720.30c and 742.60c as compared with 558.40c in the same period of the previous year. Its HEPS is expected to be between 34.0% and 38.0%, higher as compared with 566.20c in the same period of prior year.
- Hudaco (JO:HDCJ) Industries Limited: The industrial supplies company, in its FY21 trading update, stated that it expects its HEPS to be between R16.00 and R16.80, as compared with R10.50 in the prior year. It expects its basic EPS to be between R16.00 and R16.80, as compared with R1.13 in the previous year.
- Oil up on likely supply tightness: Oil prices climbed, hovering near seven-year highs hit last week, on expectations that a limited production increase by major oil producers and a solid post-pandemic recovery in fuel demand will keep a tight supply condition.